ENGLAND: 75 percent of councils facing bankruptcy over special ed costs
Oct 20, 2024, itv: Councils warn special educational needs deficits mean they could go bankrupt 'overnight'
VIDEO: Up to three quarters of the biggest local authorities in England could go bankrupt because of the surge in costs of providing care for children with special educational needs. The current nationwide deficit is four billion pounds [$5.2B], and that’s set to double in two years time.
Until now councils have been allowed to keep these costs off the books so they don’t show on authorities’ balance sheets. BUT, that exemption is set to expire next March, and many say the situation is simply quite unmanageable.
Stuck in the middle, of course, are families who often have to go to extraordinary lengths to make sure their children get the care and support they need.
Well today the government has admitted this is a moral issue. . . .
The report continued, describing the how special schools are full.
Shona Crichton, Principal: Over the years we’ve had rising costs, and we haven’t had an increase in funding. That can make it really difficult to balance the books.
itv: So for schools like this one, classes that did have six to eight pupils, now have 12 to 14.
Crichton: We have to make difficult choices from time to time about what provision we can and cannot meet, and that then means that more and more children are having a more watered down version of the school that they may well have had historically.
itv: Across England the national crisis in special needs funding is now pitting parents against the councils who fund these places. . . .
A parent of autistic sons with no school place was shown. The father described the battle he faced getting special school placement.
itv: All over the country councils say they are at breaking point. The number of children with special needs has risen by more than half a million in 10 years to over 1.7 million.
Almost a third have an Education, Health and Care Plan that brings extra support. Many more are being placed in special schools, but it is expensive. State placement costs 25, 000 pounds [$32K] and independent placement, 58,500 pounds [$76K] a year, and that compares with to 8,200 pounds [$11K] in a mainstream school.
And today we can reveal the English councils are now sitting on SEND deficit of 4 billion pounds [$5.1B] nationwide, that will hit 5.9 billion pounds [$7.7B] next year.
Councils are being allowed to use an accounting fudge called statutory override that keeps this off the books, but only till 2026.
Now half of this year’s deficit is being held by 38 large rural councils, part of the county councils network of which 18 say they will go bankrupt overnight if it isn’t fixed.
Wiltshire Councillor, Richard Clewer: Our councils are under a huge strain. There are many councils that are really struggling to stay solvent right now.
This is an additional worry none of us need, but for any strategic top tier authority where you’re seeing the deficit increasing, and it’s probably going to double in the course of two years based on current projections, which shows how serious the problem is.
That will break councils. The government needs to step back in and reform the system.
itv: And today, a hint from Westminster that something is coming.
Minister of State for Care, Stephen Kinnock, MP: It’s a really important moral issue for the government. We’ve got to ensure that its funding is on a stable footing.
And I know that the Education Secretary and the Chancellor and the Deputy Prime Minister are looking at this issue, and that the Chancellor is going to be setting out further details in the budget.
. . .
itv: All sides seem to agree on one thing, that a broken system is failing the children at the heart of it. . . .
Speaking to sources inside government, it is clear that they recognize how bad this is right now. People said things like ‘disaster,’ ‘crisis,’ ‘perfect storm’ to me today because of the funding pressures on both schools and councils.
We’ve got this vicious circle where a parent can’t get the provision they need in a mainstream school, so they fight to get their kid into a private or a state special school. The council pushes back because it doesn’t have money.
So what is the solution?
I think there is an acceptance that part of it is extra money, and I do think we can expect something in the budget on this.
But beyond that, it is clear that people think that there needs to be a massive reform.
Talking to sources, the Education Secretary, Bridget Phillipson, is particularly focused on what needs to change in mainstream schools in order to make them more inclusive for children with special educational needs.
COPY
A decision to let English councils build up "hidden deficits" to cover the surging cost of special educational needs and disabilities (SEND) now risks bankrupting almost three-quarters of the largest local authorities, it has been warned.
Research shared exclusively with ITV News and the FT reveals that councils - which have been allowed to use an accounting fudge to keep the losses off their balance sheets - have already amassed SEND deficits of £4 billion [$5.1B]nationwide.
The data - from the County Councils Network (CCN), Society of County Treasurers and Association of Local Authority Treasurers - suggests the figure will balloon to £5.9 billion [$7.7B] next year, and then £8 bn [$10B] after that.
Large and often rural councils represented by the CCN have the largest deficits. This year £2 billion [$2.6B] - or half of the total deficit - falls on the shoulders of its 38 members who say the situation is now "unmanageable". Their deficits are expected to rise to £2.7 billion[$3.5B] in 2025/26, and then £3.8 billion [$4.9B].
The councils have only been able to carry the deficits because the government introduced an accounting method known as a 'statutory override' that keeps the money off the books, but it is due to expire in March 2026.
A separate survey of its members by the CCN reveals that 26 councils believe they will have to trigger a section 114 and effectively declare bankruptcy by the end of 2027 if the funding crisis is not fixed. Wiltshire Council is one of 18 councils warning it would go insolvent immediately if the override is withdrawn.
Its leader, Councillor Richard Clewer, said Wiltshire was in a stable position overall but added: "If the statutory override wasn’t in place this would dramatically change the picture. With our special educational needs deficit already outstripping all available reserves, we would be technically bankrupt overnight."
He said the situation was "unsustainable" and needed urgent reform.
Mr Clewer and the CCN warned that extending the accountancy trick would not fix the fundamental problem - which is the spiralling costs of care.
The number of children with an EHCP (Education Health and Care Plan) that carries statutory support has risen from 240,183 to 575,973 since 2014. Another 1.2 million children fall below that threshold but still qualify for extra care. Many more children are now schooled in special schools, including private options paid for by local authorities.
Councillor Kate Foale, the SEND CCN spokeswoman, said: "With the clock ticking to March 2026 when these deficits are placed back onto councils’ budget books, the government must provide immediate clarity on a national solution to eliminating or managing councils’ deficits.
But this is only one part of the solution. We also need root and branch reform of the SEND system to address the key issues driving demand and cost, including flipping the system to make mainstream schools more inclusive for SEND pupils."
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